Car insurance is mandatory in many nations across the world. And this is for good reason: road accidents can be devastating for all the parties involved, causing emotional, financial, and mental strain. In such a distressing scenario, car insurance can help to relieve, at least, the financial upheaval that is caused.
Now, purchasing a robust car insurance policy can be a burden on your pocket. Hence, it is important that you understand the various factors that impact the premiums of car insurance.
While there is a wide range of factors that can affect the price of car insurance, some are very specific to your car. In this article, we discuss factors pertaining to the car that you own and drive that might impact car insurance premiums.
Age of the car
Brand new cars might cost more to insure than slightly old ones because their market value generally is high and they cost more to either replace or repair.
However, it is also known that very old cars could also be expensive to insure because finding their parts could be difficult and costly. Also, if the safety features of such old cars are obsolete, insurance prices will increase.
Model of the car
What type of car you drive could contribute significantly towards the insurance premiums. For instance, luxury cars, convertibles, and sports cars generally are expensive and have a high market value. Moreover, their parts are high-priced and not available easily, making them costly to insure.
In stark contrast, hatchbacks are conventionally used often by the masses, are more economical, their parts are readily available, and thus they are easy on the pocket to insure.
Cost of the car
The cost of your car is one major factor in determining the insurance premium. The theft of an expensive car would result in hefty claims applied by the owner. Thus, the insurance company increases the premiums of more expensive cars to cover the risks of such a claim being filed.
Cost of repair of the car
As the entire concept of car insurance is based on paying out for any damages or repairs to the car, the cost of repairing your car has a huge impact on the premium amounts.
A dent or a scratch on a $3 million car will clearly cost more to repair than a dent on a $20,000 car, isn’t it? The insurer, then, will charge a higher premium on those cars that are more expensive to repair.
Likelihood of theft of the car
Some cars are certainly more appealing to thieves than others! If your car, unfortunately, falls under the category of most stolen cars, you are likely to pay a bigger premium than otherwise.
Safety features of the car
Because car insurance covers for any damages that occur to your car, mitigating the risks might result in lower car insurance. When you have more safety and security features in your car, the risk of your vehicle getting stolen or meeting with a road accident decreases drastically. Thus, such cars are considered low-risk your premiums will be calculated by factoring in such features.
So, if you have fitted your car with appropriate safety equipment, such as gear lock, collision warning technology, handle locks, airbags, electronic stability control, GPS tracking device, Autonomous Emergency Braking facility, then it is likely that you will pay lower premium amounts.
Also, if the insurer’s data says that the accident rate of your car is high, you might end up paying higher premiums.
Modifications to the car
Often, we renovate a car to make it look more appealing and to enhance its performance. However, such features can have a dramatic impact on its insurance.
For instance, expensive in-car entertainment systems or speakers will make a car vulnerable to theft and might increase the premiums.
Types of engine
The type of engine of your car can have a significant impact on insurance rates. Cars that run on diesel are more expensive than cars that run on petrol, making the former more expensive to insure.
Frequency of usage of the car
The more you drive, the more the likelihood of accidents, resulting in a greater probability of claims. For instance, commuting long distances to work each day might result in more accidents than driving to just run some errands once in a while. Thus, if you drive more miles annually than average, you might end up paying higher premiums.
So, when making a decision to buy a car, you may want to also think about the ensuing insurance cost that you’d have to bear as the owner of that car. On the other hand, being more educated about the various factors that contribute to your car insurance premium will help you make the right decision at the time of insuring your car.
I’m Suraj Dabla and I’m a digital marketer and Content writer for eDigital Interactive. I’m passionate about exploring and writing about innovation, Education, VoIP, and digital marketing trends. I also manage my personal blog at Pulse Phase where I actively share my thoughts on Education and trending government Exams